Ispire Technology Inc. 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to _________

Commission file number: 001-41680

Ispire Technology Inc.

(Exact name of registrant as specified in its charter)

Delaware		93-1869878
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

19700 Magellan Drive

Los Angeles, California

90502

(Address of principal executive offices)

(Zip Code)

(310) 742-9975

(Registrant’s telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class:		Trading Symbol(s)		Name of Each Exchange on Which Registered
Common Stock, par value $0.0001 per share		ISPR		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐Yes ☒ No

As of November 6, 2025, there were 57,289,864 shares of common stock outstanding.

ISPIRE TECHNOLOGY INC.

TABLE OF CONTENTS

		Page
	PART I - FINANCIAL INFORMATION	1
Item 1.	Financial Statements	1
	Unaudited Condensed Consolidated Balance Sheets as of September 30, 2025 and June 30, 2025	1
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended September 30, 2025 and 2024	2
	Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended September 30, 2025 and 2024	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2025 and 2024	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31

	PART II – 2 OTHER INFORMATION	32
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults upon Senior Securities	32
Item 4.	Mine and Safety Disclosure	32
Item 5.	Other Information	33
Item 6.	Exhibits	33

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (the “Quarterly Report”), and any documents we incorporate by reference, contain, or may contain, certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve significant risks and uncertainties. All statements contained in this Quarterly Report and in any exhibits, other than statements of historical facts, are forward-looking statements including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

The words “may,” “will,” “could,” “would,” “should,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “potential” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, statements about:

●

our goals and growth strategies;

●

our expectations regarding demand for and market acceptance of our brand and platforms;

●

our future business development, results of operations and financial condition;

●

the actual timing for and results of the PMTAs described herein, and other FDA review of the our products in development

●

our ability to successfully operate our manufacturing facility in Malaysia;

●

our ability to establish material relationships with suppliers other than Shenzhen Yi Jia Technology Co., Limited (“Shenzhen Yi Jia”);

●

the effect of regulations relating to the marketing and sale of vaping products in the United States and other countries;

●

our ability to maintain and improve our infrastructure necessary to operate our business;

●

competition in the vaping industry;

●

the expected growth of, and trends in, the markets for our products and services in the markets in which jurisdictions that we sell our products;

●

the development of a market for cannabis vaping products outside of the United States, including the legalization of cannabis in certain European countries;

●

the expected growth of, and trends in, the markets for our products and services in the markets in which jurisdictions that we sell our products;

●

the effect of supply chain issues on our ability to manufacture and our ability and the ability of our distributors to distribute product;

●

the development of a market for cannabis vaping products and our ability to market cannabis products to adult users;

●

our ability to compete successfully in selling both tobacco and cannabis vapor products, the expected growth of, and trends in, the markets for our products and services in jurisdictions that we sell or plan to sell our products;

●

government policies and regulations relating to our operations, including regulations relating to the sale and distribution of our vaping products and those relating to manufacturing operations;

●

our ability to develop and maintain effective disclosure controls and procedures, and internal controls over financial reporting;

●

our ability to comply with the continued listing standards of the Nasdaq Capital Market;

●

our ability to attract and retain qualified senior management personnel and research and development staff;

●

the volatility of our operating results and financial condition and the price of our common stock;

●

the prospects of our joint venture with Touch Point Worldwide Inc. d/b/a Berify and Chemular Inc;

●

general economic and business condition in China and elsewhere;

●

assumptions underlying or related to any of the foregoing; and

●

other risks and uncertainties, including those listed in the “Risk Factors” section of this this Quarterly Report and our Annual Report on Form 10-K for the fiscal year ended June 30, 2025, filed with the SEC on September 15, 2025.

These forward-looking statements are only predictions and we may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, so you should not place undue reliance on our forward-looking statements, which speak only as of the date of this Quarterly Report or, in the case of any exhibits hereto, the date of those documents. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. These forward-looking statements involve risks and uncertainties that are subject to change based on various factors (many of which are beyond our control). We have included important factors in the cautionary statements included in this Quarterly Report that could cause actual future results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

You should read this Quarterly Report and the documents that we incorporate by reference with the understanding that our actual future results may be materially different from what we expect. All subsequent written or oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this Quarterly Report or to reflect the occurrence of unanticipated events, except as may be required under applicable U.S. securities law. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

OTHER PERTINENT INFORMATION

Unless the context requires otherwise, references in this Quarterly Report to “we,” “us,” “our,” the “Company,” “Ispire,” or similar terminology refer to Ispire Technology Inc.

iii

PART I - FINANCIAL INFORMATION

ITEM 1 - Financial Statements

ISPIRE TECHNOLOGY INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In $USD, except share and per share data)

	September 30, 2025			June 30, 2025
Assets
Current assets:
Cash	$	22,659,118		$	24,351,765
Restricted cash		50,000			-
Accounts receivable, net		44,522,796			39,664,145
Inventories, net		6,162,118			6,647,970
Prepaid expenses and other current assets		1,733,658			2,244,505
Total current assets		75,127,690			72,908,385
Non-current assets:
Accounts receivable – non current		-			7,367,158
Property, plant and equipment, net		2,731,346			2,952,800
Intangible assets, net		2,340,700			2,232,620
Right-of-use assets – operating leases		4,719,751			5,030,005
Other investment		2,000,000			2,000,000
Equity method investment		9,316,267			9,515,546
Other non-current assets		210,617			210,617
Total non-current assets		21,318,681			29,308,746
Total assets	$	96,446,371		$	102,217,131
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	4,654,008		$	4,172,476
Accounts payable – related party		47,442,029			52,420,256
Contract liabilities		2,962,299			4,861,250
Accrued liabilities and other payables		7,575,391			8,099,991
Income tax payable		281,856			-
Borrowing – current portion		1,146,766			1,146,766
Operating lease liabilities – current portion		1,750,411			1,838,815
Total current liabilities		65,812,760			72,539,554

Non-current liabilities:
Amount due to a related party		29,000,000			25,000,000
Borrowing – net of current portion		518,669			805,361
Operating lease liabilities – net of current portion		2,883,856			3,267,522
Total non-current liabilities		32,402,525			29,072,883
Total liabilities		98,215,285			101,612,437

Commitments and contingencies

Stockholders’ equity:
Common stock, par value $0.0001 per share; 140,000,000 shares authorized; 57,289,864 and 57,193,734 shares issued and outstanding as of September 30, 2025 and June 30, 2025		5,729			5,719
Treasury stock, at cost		(105,489	)		(60,488	)
Additional paid-in capital		49,771,739			48,833,601
Accumulated deficit		(51,324,130	)		(48,065,267	)
Accumulated other comprehensive loss		(116,763	)		(108,871	)
Total stockholders’ (deficit)/equity		(1,768,914	)		604,694
Total liabilities and stockholders’ equity	$	96,446,371		$	102,217,131

See notes to unaudited condensed consolidated financial statements.

ISPIRE TECHNOLOGY INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS

(In $USD, except share and per share data)

	Three Months Ended September 30,
	2025			2024

Revenue	$	30,350,884		$	39,338,313
Cost of revenue		25,204,112			31,663,935
Gross profit		5,146,772			7,674,378
Operating expenses:
Sales and marketing expenses		1,564,844			2,992,247
Credit loss expenses		1,764,252			3,102,081
General and administrative expenses		4,512,985			6,842,919
Total operating expenses		7,842,081			12,937,247
Loss from operations		(2,695,309	)		(5,262,869	)
Other (expense) income, net:
Interest income		95,472			86
Interest expense		(112,176	)		(11,464	)
Exchange gain, net		9,802			117,585
Other (expense) income, net		(70,583	)		18,399
Total other (expense) income, net		(77,485	)		124,606
Loss before income taxes		(2,772,794	)		(5,138,263	)
Income taxes		(486,069	)		(456,753	)
Net loss	$	(3,258,863	)	$	(5,595,016	)
Other comprehensive loss
Foreign currency translation adjustments		(7,892	)		(154,937	)
Comprehensive loss		(3,266,755	)		(5,749,953	)
Net loss per share
Basic and diluted	$	(0.06	)	$	(0.10	)
Weighted average shares outstanding:
Basic and diluted		57,273,184			56,601,320

See notes to unaudited condensed consolidated financial statements.

ISPIRE TECHNOLOGY INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In $USD, except share and per share data)

	Common Stock							Additional					Accumulated Other			Total
	Number of Shares		Amount		Treasury Stock			Paid-in Capital		Retained Earnings			Comprehensive (Loss)/Income			Stockholders’ Equity/(Deficit)

Balance, July 1, 2025		57,193,734	$	5,719	$	(60,488	)	$	48,833,601	$	(48,065,267	)	$	(108,871	)	$	604,694

Net loss		-		-		-			-		(3,258,863	)		-			(3,258,863	)

Issuance of common stock for equity incentives		96,130		10		-			240,974		-			-			240,984

Stock based compensation expenses		-		-		-			697,164		-			-			697,164

Common stock repurchase		-		-		(45,001	)		-		-			-			(45,001	)

Foreign currency translation adjustment		-		-		-			-		-			(7,892	)		(7,892	)

Balance, September 30, 2025		57,289,864	$	5,729	$	(105,489	)	$	49,771,739	$	(51,324,130	)	$	(116,763	)	$	(1,768,914	)

Balance, July 1, 2024		56,470,636	$	5,647	$	-		$	43,217,391	$	(8,825,041	)	$	58,343		$	34,456,340

Net loss		-		-		-			-		(5,595,016	)		-			(5,595,016	)

Issuance of common stock for equity incentives		170,405		17		-			1,119,094		-			-			1,119,111

Stock based compensation expenses		-		-		-			888,477		-			-			888,477

Foreign currency translation adjustment		-		-		-			-		-			(154,937	)		(154,937	)

Balance, September 30, 2024		56,641,041	$	5,664	$	-		$	45,224,962	$	(14,420,057	)	$	(96,594	)	$	30,713,975

See notes to unaudited condensed consolidated financial statements.

ISPIRE TECHNOLOGY INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In $USD, except share and per share data)

	Three Months Ended September 30,
	2025			2024

Net loss	$	(3,258,863	)	$	(5,595,016	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		253,410			204,807
Credit loss expenses		1,764,252			3,102,081
Right-of-use assets amortization		307,740			283,188
Stock-based compensation expenses		938,148			2,007,588
Inventory impairment		423,457			73,692
Loss from equity method investment		199,279			75,973
Debt issuance cost amortization		32,312			-
Changes in operating assets and liabilities:
Accounts receivable		744,255			(5,726,638	)
Inventories		62,395			(700,323	)
Prepaid expenses and other current assets		509,535			(14,319	)
Accounts payable and accounts payable – related party		(496,695	)		9,517,069
Contract liabilities		(1,898,951	)		(87,402	)
Accrued liabilities and other payables		(576,181	)		360,697
Operating lease liabilities		(469,556	)		(291,249	)
Prepaid income tax/income tax payable		281,856			399,995
Net cash (used in) provided by operating activities		(1,183,607	)		3,610,143

Cash flows from investing activities:
Purchase of property, plant and equipment		(7,502	)		(268,781	)
Capitalized costs for patents		(132,534	)		(656,422	)
Net cash used in investing activities		(140,036	)		(925,203	)

Cash flows from financing activities:
Repayment of borrowing		(319,004	)		-
Net cash used in financing activities		(319,004	)		-

Net (decrease) increase in cash		(1,642,647	)		2,684,940
Cash – beginning of period		24,351,765			35,071,294
Cash and restricted cash– end of period	$	22,709,118		$	37,756,234
Reconciliation of cash and restricted cash
Cash		22,659,118			37,731,954
Restricted cash		50,000			24,280
Total cash and restricted cash	$	22,709,118		$	37,756,234
Supplemental non-cash investing and financing activities
Reclassification of accounts receivable – non current to accounts receivable	$	6,934,364		$	-
Reclassification of accounts payable – related party to amount due to a related party	$	4,000,000		$	-
Unpaid common stock repurchase	$	45,001		$	-
Supplemental disclosures
Cash paid for income taxes	$	-		$	44,738
Cash paid for interest	$	112,176		$	11,464

See notes to unaudited condensed consolidated financial statements.

ISPIRE TECHNOLOGY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. ORGANIZATION AND PRINCIPAL ACTIVITIES

Ispire Technology Inc. (the “Company” or “Ispire”) was incorporated under the laws of the State of Delaware on June 13, 2022. Through its subsidiaries, the Company is engaged in the research and development, design, commercialization, sales, marketing and distribution of branded e-cigarettes and cannabis vaping products.

Ispire owns a 100% equity interest in Ispire International Limited, a business company incorporated under the laws of the British Virgin Islands (“BVI”) (“Ispire International”) on July 6, 2022.

Prior to July 29, 2022, all of the equity of Aspire North America LLC, a California limited liability company (“Aspire North America”), was owned by Aspire Global Inc. (“Aspire Global”), and all of the equity of Aspire Science and Technology Limited, a Hong Kong corporation (“Aspire Science”), was owned by Aspire Global Holdings Limited (“Aspire Holdings”), a wholly-owned subsidiary of Aspire Global.

Aspire Global and the Company are related parties since the same individual is the chief executive officer of both companies. As of September 30, 2025, the chief executive officer and his wife, being directors of both companies, owned 66.5% and 5.0% of the equity of Aspire Global, respectively. As of September 30, 2025, they owned 58.0% and 4.4% of the equity of the Company, respectively. On July 29, 2022, Aspire Global transferred 100% of the equity interest in Aspire North America to the Company. On the same day, Aspire Holdings transferred 100% of the equity of Aspire Science to Ispire International. At the time of transfer of the equity in Aspire North America and Aspire Science, the Company had the same stockholders as Aspire Global, and the Company’s stockholders held the same percentage interest in the Company as they had in Aspire Global. Because the transfer of the equity in Aspire North America and Aspire Science is a transfer between related parties, the historical financial information of the subsidiaries is carried forward as the historical financial information of the Company and the 50,000,000 shares that were issued at or about the time of the Company’s organization are treated as being outstanding on July 1, 2020.

In September 2023, the Company established a wholly-owned subsidiary, Ispire Malaysia Sdn Bhd (“Ispire Malaysia”) under the laws of the Federation of Malaysia, in order to establish manufacturing operations in Southeast Asia. Ispire Malaysia was formed by Tuanfang Liu, the Company’s Chairman and Co-Chief Executive Officer on August 2, 2023, and assigned to the Company on September 22, 2023, at a consideration of 100 Malaysian ringgits, equivalent to USD 21.

In July 2024, the Company established a wholly-owned subsidiary, Aspire AME Electronic Cigarettes Trading LLC (“Ispire UAE”) under the laws of the United Arab Emirates (“UAE”), in order to establish sales and marketing in the UAE.

In October 2024, the Company established a wholly-owned subsidiary, Magellan Trading LLC (Magellan Trading) incorporated under the laws of the State of California to assist in operations and logistics for the Company.

In January 2025, the Company established a wholly-owned subsidiary, Ispire Products UK LTD (Ispire UK) incorporated under the laws of England and Wales to assist in sales and marketing for the Company.

In May 2025, the Company established a wholly-owned subsidiary, Ispire Holdings LLC (Ispire Holdings) incorporated under the laws of the State of Delaware to assist in administration for the Company.

In June 2025, the Company established a wholly-owned subsidiary, Ispire Ike Holdings LLC (Ispire Ike Holdings) incorporated under the laws of the State of Delaware to assist in administration for the Company.

The following table sets forth information concerning the Company and its subsidiaries as of September 30, 2025:

Name of Entity	Date of Organization	Place of Organization	% of Ownership	Principal Activities
Ispire Technology Inc.	June 13, 2022	Delaware	Parent Company	Holding Company
Ispire International	July 6, 2022	BVI	100%	Holding Company
Aspire North America	February 22, 2020	California	100%	Research and Development, Sales and Marketing
Aspire Science	December 9, 2016	Hong Kong	100%	Sales and Marketing
Ispire Malaysia	August 2, 2023	Malaysia	100%	Manufacturing, Sales and Marketing
Ispire Global Products LLC	January 19, 2024	Delaware	100%	Sales and Marketing
Aspire AME Electronic Cigarettes Trading LLC	July 19, 2024	UAE	100%	Sales and Marketing
Magellan Trading LLC	October 1, 2024	California	100%	Operations and Logistics
Ispire Products UK LTD	January 9, 2025	England and Wales	100%	Sales and Marketing
Ispire Holdings LLC	May 20, 2025	Delaware	100%	Holding Company
Ispire Ike Holdings LLC	June 10, 2025	Delaware	100%	Holding Company

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The unaudited condensed consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present a fair statement of the Company’s consolidated financial position as of September 30, 2025 and the results of operations for the three months ended September 30, 2025 and 2024. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary in order to make the financial statements not misleading have been included. All significant intercompany accounts and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the United States Securities and Exchange Commission (“SEC”) and accordingly do not include all of the disclosures normally made in the Company’s annual consolidated financial statements. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended June 30, 2025.

The unaudited condensed consolidated balance sheet as of June 30, 2025 has been derived from the audited consolidated financial statements at such date. The results of operations for the three months ended September 30, 2025 are not necessarily indicative of the results of operations that may be expected for any other interim periods or for the year ending June 30, 2026.

Use of significant estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates include allowance for credit losses and revenue recognition. Actual results could differ from those estimates.

Fair value measurement

The Company applies ASC Topic 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value, and expands financial statement disclosure requirements for fair value measurements.

ASC Topic 820 defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) on the measurement date in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability.

ASC Topic 820 specifies a hierarchy of valuation techniques, which is based on whether the inputs into the valuation technique are observable or unobservable. The hierarchy is as follows:

●

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

●

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

●

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value. Unobservable inputs are valuation technique inputs that reflect the Company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The carrying value of certain of the Company’s financial instruments, including cash, accounts receivable, prepaid expenses and other receivables, accounts payable, accounts payable related party, contract liabilities, accrued liabilities and other payables and due to related parties, approximates their fair value because of their short-term maturity.

Allowance for credit losses

The Company adopted Accounting Standards Update 2016-13 “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments” on July 1, 2023, under the modified retrospective method of adoption. The Company uses roll rate method or evaluates the aggregation of risk characteristics of a receivable pool to develop credit losses estimate. In establishing the required allowance for doubtful accounts, management considers historical collection experience, aging of the receivables, economic environment, and the credit history and financial conditions of the customers. Management reviews its receivables on a regular basis to determine if the allowance is adequate and adjusts the allowance when necessary. Delinquent account balances are written off against allowance for doubtful accounts after management has determined that the likelihood of collection is not probable.

Inventories, net

Inventories mainly consist of finished goods purchased from suppliers. Inventories are stated at the lower of cost or net realizable value. The cost of an inventory item is determined using the weighted average method.

When management determines that certain inventories may not be saleable, or there is an indicator that certain inventory costs may exceed expected market value, the Company will record the difference between the cost and the net realizable value as a write down of inventories. The net realizable value is determined based on the estimated selling price, in the ordinary course of business, less estimated costs necessary to make the sale. The Company records an allowance for slow moving and potentially obsolete inventory based upon recent sales history, the quantity of inventory on-hand, and an estimate of expected sellable life of the inventory. The Company periodically reviews inventory to identify slow moving inventories and compares the forecast sales with the quantities and expected sellable life of inventory. Any inventories identified during this process are reserved for at rates based upon management’s judgment and historical rates. The quantity thresholds and reserve rates are based on management’s judgment and knowledge of current and projected demand. The reserve estimates may, therefore, be revised if there are changes in the overall market for the Company’s products or market changes that in management’s judgment, impact its ability to sell potentially obsolete inventory. As of September 30, 2025 and June 30, 2025, the Company recorded inventory reserves of $1,384,027 and $960,570, respectively.

Intangible assets, net

Intangible assets refer to capitalized external costs, such as filing fees and associated attorney fees, incurred to obtain issued patents and patent license rights. The Company expenses costs associated with maintaining patents subsequent to their issuance in the period incurred. Capitalized patent costs are amortized on a straight-line basis over estimated useful lives of 15 – 20 years, which are based on the length of the license agreements as the Company expects to receive economic benefits over that time. The Company assesses the potential impairment to capitalized patent costs when events or changes in circumstances indicate that the carrying amount of our patent portfolio may not be recoverable. $132,534 and $656,422 of patent fees were capitalized during the three months ended September 30, 2025 and 2024. The amortization of the intangible assets was $24,454 and $16,283 for the three months ended September 30, 2025 and 2024 respectively. The amortization expenses were included in the general and administrative expenses.

Revenue recognition

The Company sells its vaping products to customers and recognizes revenue in accordance with the guidance of ASC 606, Revenue from Contracts with Customers. Many customers are distributors that resell the Company’s products in various geographic regions. The performance obligations are for the Company to transfer the title and control of the goods to a customer for a determined price. Each order is considered a separate contract with a single performance obligation. Revenue is recognized when control of goods has transferred to customers. For the majority of the Company’s customer arrangements, control transfers to customers at a point-in-time when goods have been delivered to the pickup location specified by the customer or a forwarder appointed by the customer, as that is generally when legal title, physical possession and risks and rewards of goods transfer to the customer.

Revenue is recognized at the transaction price based on the purchase order as adjusted for the anticipated rebates, discounts and other sales incentives. When determining the transaction price, management estimates variable consideration applying the portfolio approach practical expedient under ASC 606. The main sources of variable consideration for the Company are sales returns. These sales returns are recorded as a reduction of revenue at the time of the initial sale using the most-likely amount estimation method. The most-likely amount method is based on the single most likely outcome from a range of possible consideration outcomes.

The Company offers different payment terms to different customers. For nicotine vaping products, the general payment term is a deposit of 30% of sales amount upon placing order, and the payment of the remaining 70% to be made before shipment. For cannabis vaping products, a tailored payment term is designed for each customer, based on the business relationship, order size and other considerations. All contract liabilities at the beginning of the period were recognized as revenues in the reporting period. The Company offers a thirty-day warranty. The warranty is an assurance-type warranty, and it offers replacement of products in case the products sold do not function as expected. In certain sales contracts, a right of return is offered. With a right of return, a customer is given the right to return the products if they are not satisfied with the product, and a credit would be given. The Company has a very low rate of return in history and a return reserve is accrued based on historical return rate and the management’s judgement. The Company has minimal incremental costs of obtaining a contract and are expensed when incurred. Sales taxes, which are sales and use or other similar taxes collected from the customer and remitted to the applicable taxing authority by the Company in accordance with applicable law, are excluded from revenue.

Disaggregated Revenue

The Company has taken into consideration the nature, amount, timing, and uncertainty of revenue and cash flows, and has determined to disaggregate its net sales by region. The net sales disaggregated by region for the three months ended September 30, 2025 and 2024, were as follows:

	Three Months Ended September 30,
	2025		2024
Europe	$	20,698,644	$	21,951,373
North America (the U.S. and Canada)		5,469,059		9,736,888
Asia Pacific (excluding PRC)		2,373,643		3,875,384
Others		1,809,538		3,774,668
Total		30,350,884		39,338,313

Cost of revenue

Cost of revenue for the three months ended September 30, 2025 and 2024 consisted primarily of the cost of purchasing vaping products, freight-in cost and inventory impairment, which were mostly purchased from a related party. See Note 11.

Stock-based compensation

The Company measures and recognizes compensation expenses for stock-based payment awards, including stock options, restricted stock granted to directors and advisors, and restricted stock units (“RSUs”) granted to employees, based on the grant date fair value of the awards. The Company engages a third-party valuer to assist in determining the fair value of stock options using the binomial option pricing model, with significant assumption of exercise multiple, expected volatility, risk-free interest rate and expected dividend yield. The fair value of RSUs is measured on the grant date based on the closing market price of the Company’s common stock. The stock-based payment awards typically include time-based vesting conditions, however, certain of the Company’s stock-based payment awards may include performance-based vesting conditions.

For stock-based payment awards with time-based vesting conditions, the resulting cost is recognized over the period during which an employee is required to provide service in exchange for the awards, usually the vesting period, which is generally four years for stock options and three years for RSUs. Stock-based compensation expense is recognized on a straight-line basis over the period during which services are provided in exchange for the award. For stock-based payment awards with performance-based vesting conditions, the Company will estimate the probability that the performance condition will be met at each reporting date. Stock-based compensation expense is only recognized for stock-based payment awards that are probable of vesting. Ultimately, the cumulative stock-based compensation expense recognized by the Company is the grant date fair value of the awards where the performance conditions have been met and the awards have vested.

Stock-based compensation expense is recorded in the sales and marketing expense and general and administrative expense in the unaudited condensed consolidated statements of operations. The Company recognizes forfeitures of stock-based payment awards upon occurrence.

Earnings per share

The Company computes earnings per share (“EPS”) in accordance with ASC 260, Earnings per Share. ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net loss divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (for example, convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potentially dilutive shares could dilute basic EPS in the future that were not included in the computation of diluted EPS because to do so would have been antidilutive for the three months ended September 30, 2025 and 2024. Potentially dilutive shares were as follows:

	As of September 30,		As of September 30,
Dilutive securities:	2025		2024
Share options		1,750,000		3,165,000
Unvested restricted stock units		602,980		462,027
Warrants		173,211		173,211
Total		2,526,191		3,800,238

Segment reporting

Based on the criteria established by ASC 280, and ASU 2023-07 that Company adopted during the year ended June 30, 2025, the Company’s chief operating decision maker (“CODM”) has been identified as its Chief Executive Officer, who reviews the consolidated results when making decisions about allocating resources and assessing performance of the Company as a whole and hence, the Company has only one reportable segment. The Company does not distinguish between markets or segments for the purpose of internal reporting. Therefore, no geographical segments are presented. For the three months ended September 30, 2025 and 2024, the reportable segment revenue, segment profit or loss and significant segment expenses are the same as unaudited condensed consolidated comprehensive loss statement.

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the CODM, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s CODM is Mr. Tuanfang Liu, the Co-Chief Executive Officer and Chairman, and Mr. Michael Wang, the Co-Chief Executive Officer.

The Company’s organizational structure is based on a number of factors that the CODM uses to evaluate, view and run its business operations which include, but not limited to, customer base, homogeneity of products and technology. The Company’s operating segment is based on such organizational structure and information reviewed by the Company’s CODM to evaluate the operating segment results. The Company has internal reporting of revenue, cost and expenses by nature as a whole. Hence, the Company has only one operating segment.

The accounting policies of the single segment are the same as described in the significant accounting policies. The CODM assesses performance for the single segment and decides how to allocate resources based on net loss that also is reported on the unaudited condensed consolidated statements of comprehensive loss as consolidated net loss. The measure of the single segment assets is reported on the unaudited condensed consolidated balance sheets as total consolidated assets.

The CODM reviews revenues and expenses at the consolidated level as disclosed in the Company’s unaudited condensed consolidated statements of comprehensive loss and uses net loss to evaluate return on assets and to monitor budget versus actual results and in competitive analysis by benchmarking to the Company’s competitors. The competitive analysis and the monitoring of budgeted versus actual results are used in assessing the segment’s performance and in establishing management’s compensation.

Recent accounting pronouncements

As an emerging growth company, the Company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company intends to take advantage of the benefits of this extended transition period for all accounting standards described below, if applicable.

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements. The amendments in this update modify the disclosure or presentation requirements of a variety of topics in the codification. Certain of the amendments represent clarifications to or technical corrections of the current requirements. The adoption of the amendment will occur on a prospective basis. The amendments in this ASU will be effective for public business entities on the effective date of the SEC’s removal of the related disclosures from Regulation S-X or Regulation S-K. If the SEC has not removed the applicable requirements from Regulation S-X or Regulation S-K by June 30, 2027, the amendments will not become effective for any entity. The Company is currently evaluating the impacts of the provisions of ASU 2023-06.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures. ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The guidance is effective for public business entities for annual periods beginning after December 15, 2024, and for private entities for annual periods beginning after December 15, 2025, on a prospective basis. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement: Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40), to improve the disclosures about an entity’s expenses. In January 2025, the FASB issued ASU 2025-01 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. Upon adoption, the Company will be required to disclose in the notes to the financial statements a disaggregation of certain expense categories included within the expense captions on the face of the income statement. The standard can be applied either prospectively or retrospectively. The Company is currently assessing adoption timing and the effect that the updated standard will have on our financial statement disclosures.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326), to address challenges encountered when applying the guidance in Topic 326, Financial Instruments—Credit Losses. The amendment provides (1) all entities with a practical expedient and (2) entities other than public business entities with an accounting policy election when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606. The standard is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. The standard can be applied prospectively. The Company is currently assessing adoption timing and the effect that the updated standard will have on our financial statement disclosures.

Concentration and risks

Risks and Uncertainties

The Company’s business, financial condition and results of operations may be negatively impacted by risks related to government regulations, natural disasters, extreme weather conditions, health epidemics and other catastrophic incidents, which could significantly disrupt the Company’s operations.

E-cigarette regulation

Regulation regarding e-cigarettes varies across countries, from no regulation to a total ban. The legal status of e-cigarettes is currently pending in many countries. But as e-cigarettes have become more and more popular recently, many countries are considering imposing more stringent law and regulations to regulate this market. Changes in existing law and regulations and the imposition of new laws and regulations in countries and regions that our major customers are located in may adversely affect the Company’s business.

The Federal Food, Drug, and Cosmetic Act requires all Electronic Nicotine Delivery Systems (“ENDS”) product manufacturers that market products in the United States to submit Premarket Tobacco Product Applications (“PMTAs”) to the Food and Drug Administration (“FDA”). For ENDS products that were on the U.S. market on or before August 8, 2016, a PMTA was required to be submitted to the FDA before September 9, 2020; for ENDS products that were not on the U.S. market prior to August 8, 2016, and for which a PMTA was not filed before September 9, 2020, a PMTA premarket authorization issued by FDA is required before the subject product may enter the U.S. market. The Company has submitted a PMTA filing for one ENDS product, and, under apparent FDA policies, FDA will not enforce the premarket review requirements for that product pending review of its PMTA. However, even with submission of the PMTA application, the FDA may reject the Company’s application and may prevent the Company’s ENDS products from being sold in U.S., which will adversely affect the Company’s business.

Amendments to the Prevent All Cigarette Trafficking (“PACT”) Act, which became law in 2021, extend the PACT Act to include e-cigarette and all vaping products, and place significant burdens on sellers of vaping products in the United States which may make it difficult to operate profitably in the United States. Because of tighter government regulations, the Company has stopped marketing tobacco vaping products in the United States, as the volume of sales from the one tobacco vaping product which the Company may sell in the United States does not justify the marketing and regulatory costs involved.

In the United States, cannabis vaping products are governed by state laws, which vary from state to state. Most states do not permit the adult recreational use of cannabis, and no states permit the sale of recreational cannabis products to minors. The Company cannot predict what action states will take or the nature and amount of taxes they may impose. However, to the extent the PACT Act applies to cannabis products that aerosolize liquids, it may be more difficult to sell our products in states that permit the sale of cannabis.

However, cannabis and its derivatives containing more than 0.3% delta-9 tetrahydrocannabinol on a dry weight basis remain Schedule I controlled substances under U.S. federal law, meaning that federal law generally prohibits their manufacture and distribution. United States federal law also deems it unlawful to sell, offer for sale, transport in interstate commerce, import, or export “drug paraphernalia,” which includes “any equipment, product, or material of any kind which is primarily intended or designed for use in manufacturing, compounding, converting, concealing, producing, processing, preparing, injecting, ingesting, inhaling, or otherwise introducing into the human body a controlled substance” the possession of which federal law prohibits, including Schedule I “marijuana.” Limited exemptions exist, most notably when state or local law authorizes these items’ manufacture, possession, or distribution.

The European Commission issued the Tobacco Products Directive (the “TPD”), which became effective on May 19, 2014, and became applicable in the European Union member states on May 20, 2016. The TPD regulates e-cigarettes on the packaging, labelling and ingredients of the products on the European Union market, the creation of smoke-free environments, tax measures and activities against illegal trade and anti-smoke campaigns. Member states of the European Union are required to ensure that advertisements for any tobacco related product are prohibited, and no promotion shall be made as to those devices with an intention to promote e-cigarettes. For the e-cigarettes released after May 20, 2016, TPD requires e-cigarette manufacturers to submit product sales applications to the regulatory market six months in advance, and ensure their products can meet the TPD requirements before they can be released. The Company has complied with TPD requirement for products sold in Europe.

The sale of cannabis vaping products is illegal in the European Union and the United Kingdom.

Customer and Supplier Concentration

(a) Customers

For the three months ended September 30, 2025 and 2024, the Company’s major customers, who accounted for more than 10% of the Company’s consolidated revenue, were as follows:

	Three Months Ended September 30,
	2025			2024
Major Customers
A		25	%		21	%
B		16	%		*
C		*			14	%

*	Represented less than 10% of consolidated revenue.

(b) Suppliers

For the three months ended September 30, 2025 and 2024, the Company’s suppliers, who accounted for more than 10% of the Company’s total purchases, were as follows:

⁽¹⁾	Major supplier D is Shenzhen Yi Jia, a Chinese company that is 95% owned by the Company’s co-chief executive officer and principal stockholder. See Note 11.

Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and accounts receivable. The Company maintains its cash in financial institutions. Accounts at United States financial institutions are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. Accounts at Malaysian financial institutions are insured by the Perbadanan Insurans Deposit Malaysia (“PIDM”) up to RM 250,000. The Hong Kong Deposit Protection Board pays compensation up to a limit of Hong Kong Dollar (“HKD”) 800,000. The Company may carry cash balances at financial institutions in excess of the insured limits. The amount in excess of the deposit insurance as of September 30, 2025 and June 30, 2025 was $22,272,111 and $23,939,618. The Company has not experienced losses on these accounts and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant.

As of September 30, 2025 and June 30, 2025, the Company’s customers, whose accounts receivable balances accounted for more than 10% of the Company’s total accounts receivable, net, were as follows:

	As of September 30,			As of June 30,
Customers	2025			2025
E		16	%		16	%
F		15	%		17	%

NOTE 3. CASH AND RESTRICTED CASH

Below is a breakdown of the Company’s cash balances in banks as of September 30, 2025 and June 30, 2025, both by geography and by currencies (translated into U.S. dollars):

	As of September 30,		As of June 30,
By Geography:	2025		2025
Cash in HK	$	21,961,087	$	23,336,668
Cash in U.S.		294,365		824,852
Cash in Malaysia		403,666		190,245
Total	$	22,659,118	$	24,351,765

By Currency:
USD	$	12,901,425	$	14,675,591
RM		94,907		101,743
HKD		161,279		139,691
EUR		11,090		11,097
GBP		23,582		24,091
RMB		9,466,835		9,399,552
Total	$	22,659,118	$	24,351,765

“HKD” refers to Hong Kong dollars, “GBP” refers to British pounds, “EUR” refers to Euros, “RM” refers to Malaysia ringgit, and “RMB” refers to Renminbi.

As of September 30, 2025 and June 30, 2025, there was restricted cash totaling $50,000 and $0, respectively, and was included in the U.S. in USD. These amounts are excluded from the cash and restricted cash totals presented in the table above. It represents a collateral account at a bank for standby letter of credit as required by the customs department.

NOTE 4. ACCOUNTS RECEIVABLE, NET

As of September 30, 2025 and June 30, 2025, accounts receivable consisted of the following:

	As of September 30,			As of June 30,
	2025			2025
Accounts receivable – gross	$	61,815,753		$	65,002,773
Allowance for credit losses		(17,292,957	)		(17,971,470	)
Accounts receivable, net	$	44,522,796		$	47,031,303

The Company recorded $1,764,252 and $3,102,081 credit loss expenses for the three months ended September 30, 2025 and 2024, respectively. For the three months ended September 30, 2025 and 2024, the Company wrote off accounts receivable against allowance for credit losses of $2,442,765 and $1,608,718, respectively. As of September 30, 2025, there were $6,934,364 accounts receivable – non current reclassified to accounts receivable as its payment term is within one year. As of June 30, 2025, there were $7,367,158 accounts receivable reclassified to accounts receivable – non current due to payment term extension arrangements with customers.

Activity in the allowance for credit losses is below:

	Three Months Ended September 30,
	2025			2024
Balance at July 1	$	17,971,470		$	5,885,238
Provision for expected losses		1,764,252			3,102,081
Write-offs charged against the allowance		(2,442,765	)		(1,608,718	)
Balance at September 30		17,292,957			7,378,601

NOTE 5. PREPAID EXPENSES AND OTHER CURRENT ASSETS

As of September 30, 2025 and June 30, 2025, prepaid expenses and other current assets consisted of the following:

	As of September 30,		As of June 30,
	2025		2025
Prepayment for inventory purchases	$	720,308	$	1,133,083
Other prepayments		205,517		270,545
Other receivable		689,060		517,080
Prepaid provisional tax		118,773		323,797
Total	$	1,733,658	$	2,244,505

NOTE 6. PROPERTY, PLANT AND EQUIPMENT, NET

As of September 30, 2025 and June 30, 2025, property, plant and equipment consisted of the following:

	As of September 30,			As of June 30,
	2025			2025
Leasehold improvements	$	817,331		$	817,327
Office and other equipment		1,648,948			1,648,733
Furniture and fixtures		881,800			877,685
Construction-in-progress		898,087			894,919
		4,246,166			4,238,664
Less: accumulated depreciation		(1,514,820	)		(1,285,864	)
Total	$	2,731,346		$	2,952,800

For the three months ended September 30, 2025 and 2024, depreciation expense amounted to $228,956 and $188,524, respectively.

Construction-in-progress refers to the office and production plant that are under construction in Malaysia, which are expected to be put into use during fiscal year 2026.

NOTE 7. EQUITY METHOD INVESTMENT

On April 5, 2024, Aspire North America entered into a capital contribution, subscription, and joint venture agreement with several other parties. Pursuant to joint venture agreement, the parties created a legal entity, IKE Tech LLC (“IKE”), whose business is licensing, owning, operating and developing an industry-standard age-verification solution for vapor (e-cigarette) devices in the U.S. market as the related planned submission of PMTA applications that seek FDA marketing orders for cutting-edge technologies across the U.S. e-cigarette market. Ispire contributed $1 million to IKE in cash for funding its operating activities and entered into a binding commitment to make an additional capital contribution to IKE in the aggregate amount of up to $9 million. In exchange for Ispire’s total investment of $10 million, IKE issued to Ispire membership interests in an aggregate amount initially equal to forty percent (40%) of the membership interests in IKE.

As of September 30, 2025 and June 30, 2025, the investment in joint venture accounted for under the equity method amounted to $9,316,267 and $9,515,546, respectively. As of September 30, 2025, the Company noticed no indicator of impairment regarding the investment.

For the three months ended September 30, 2025 and 2024, the Company’s share of the joint venture’s net loss was $199,279 and $75,973, respectively. The loss was included in “other (expense) income, net” in the unaudited condensed consolidated statements of operations and comprehensive loss.

The tables below present the summarized financial information, as provided to the Company by the investee, for the unconsolidated company:

	As of September 30,		As of June 30,
	2025		2025
Current assets	$	19,973,787	$	20,583,827
Noncurrent assets		2,754,083		2,568,283
Current liabilities		352,086		278,128
Equity		22,375,784		22,873,982

	Three Months Ended September 30,
	2025		2024
Net revenue	$	-	$	-
Gross profit (loss)		-		-
Loss from operations		498,198		189,933
Net loss		498,198		189,933

NOTE 8. CONTRACT LIABILITIES

As of September 30, 2025 and June 30, 2025, the Company had total contract liabilities of $2,962,299 and $4,861,250, respectively. These liabilities are advance deposits received from customers after an order has been placed. The decrease in the balance at September 30, 2025 was due to less orders on hand on that date. The amount of revenue recognized in the three months ended September 30, 2025, that was included in the opening contract liability balance was $2,808,405.

Changes in the contract liabilities is below:

	Three Months Ended September 30,
	2025			2024
Balance at July 1	$	4,861,250		$	2,218,166
Contract liabilities recognized related to advanced deposits		11,059,993			12,927,906
Revenue recognized in current period		(12,958,944	)		(12,900,567	)
Balance at September 30		2,962,299			2,245,505

NOTE 9. LEASES

The Company has operating lease arrangements for office premises in Hong Kong, California and Malaysia. These leases typically have terms of two to five years.

Leases with an initial term of 12 months or less are not presented as right-of-use assets on the unaudited condensed consolidated balance sheet and are expensed over the lease term. All other lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date.

The balances for the right-of-use assets and lease liabilities where the Company is the lessee are presented as follow:

	As of		As of
	September 30, 2025		June 30, 2025
Operating lease right-of-use assets	$	4,719,751	$	5,030,005

Operating lease liabilities – current	$	1,750,411	$	1,838,815
Operating lease liabilities – non-current		2,883,856		3,267,522
Total	$	4,634,267	$	5,106,337

The Company had no impairment of operating lease right-of-use assets during the three months ended September 30, 2025 and 2024.

As of September 30, 2025, the maturities of our lease liabilities (excluding short-term leases) are as follows:

	As of September 30, 2025
October 1, 2025 to June 30, 2026	$	1,554,875
July 1, 2026 to June 30, 2027		1,585,914
July 1, 2027 to June 30, 2028		779,653
July 1, 2028 to June 30, 2029		698,977
July 1, 2029 to June 30, 2030		465,985
Total future lease payments		5,085,404
Less: imputed interest		(451,137	)
Total lease liabilities	$	4,634,267

The Company incurred lease costs, which include the payment of short-term leases, of $548,763 and $382,559 on the Company’s unaudited condensed consolidated statements of operations and comprehensive loss for the three months ended September 30, 2025 and 2024, respectively.

The Company made payments of $559,101 and $390,620 under the lease agreements during the three months ended September 30, 2025 and 2024, respectively.

The weighted-average remaining lease term related to the Company’s lease liabilities as of September 30, 2025 and June 30, 2025 was 3.2 years and 3.4 years, respectively.

The discount rate related to the Company’s lease liabilities as of September 30, 2025 and June 30, 2025 was 6.3% and 6.4%, respectively. The discount rates are generally based on estimates of the Company’s incremental borrowing rate, as the discount rates implicit in the Company’s leases cannot be readily determined.

NOTE 10. ACCRUED LIABILITIES AND OTHER PAYABLES

As of September 30, 2025 and June 30, 2025, accrued liabilities and other payables consisted of the following:

	As of September 30,		As of June 30,
	2025		2025
Joint venture investment payable	$	5,841,174	$	5,841,174
Other payables		308,453		502,669
Accrued salaries and related benefits		71,241		372,294
Accrued expenses		938,290		1,180,982
Reserve for product returns		370,282		201,922
Common stock repurchase payable		45,001		-
Other tax payable		950		950
Total	$	7,575,391	$	8,099,991

Joint venture investment payable refers to payable to IKE, which is a related party, please see Note 7 and Note 11 for details.

NOTE 11. RELATED PARTY TRANSACTIONS

a)	The table below sets forth the major related parties and their relationships with the Company:

Name of related parties and Relationship with the Company

- Tuanfang Liu is the Co-Chief Executive Officer and Chairman of the Company.

- Jiangyan Zhu is the wife of Tuanfang Liu and a director of the Company.

- Eigate (Hong Kong) Technology Co., Limited (“Eigate”) is a wholly-owned and controlled by the Company’s Chairman.

- Aspire Global is a company controlled by the Chairman of the Company.

- Aspire International Hong Kong Limited is a wholly-owned subsidiary of Aspire Global.

- Shenzhen Yi Jia, a Chinese company that is 95% owned by the Company’s Chairman and 5% by the Chairman’s cousin.

- IKE Tech LLC, a joint venture that the Company has 40% membership interests.

Tuanfang Liu is also Aspire Global’s chief executive officer and a director of both the Company and Aspire Global, and his wife, Jiangyan Zhu, is also a director of both companies. As of September 30, 2025, Mr. Liu and Ms. Zhu beneficially own 66.5% and 5.0%, respectively, of the outstanding shares of Aspire Global. As of September 30, 2025, Mr. Liu and Ms. Zhu beneficially own 58.0% and 4.4%, respectively, of the outstanding shares of the Company.

For the three months ended September 30, 2025 and 2024, the majority of the Company’s tobacco and cannabis vaping products were purchased from Shenzhen Yi Jia. As of September 30, 2025 and June 30, 2025, the accounts payable – related party was $47,442,029 and $52,420,256, respectively, which was payable to Shenzhen Yi Jia. There are no fixed payment terms regarding these balances and they are classified as current liabilities. For the three months ended September 30, 2025 and 2024, the purchases from Shenzhen Yi Jia were $22,901,368 and $30,583,105, respectively.

The balances due to a related party at September 30, 2025 and June 30, 2025 represent amounts due to Shenzhen Yi Jia of $29,000,000 and $25,000,000, respectively. These balances were reclassified from accounts payable – related party as Shenzhen Yi Jia agreed not to seek repayment of this balance for twelve months starting from November 1, 2025. The balances are non-interest bearing and unsecured.

e)	As of September 30, 2025 and June 30, 2025, the Company had total accounts receivable of $56,995 and $75,147 due from IKE. For the three months ended September 30, 2025 and 2024, the Company recorded $10,132 and $0 in other income from IKE from charging administrative fees.

NOTE 12. INCOME TAXES

For the three months ended September 30, 2025 and 2024 loss before income taxes consists of:

	Three months ended September 30,
	2025			2024
HK	$	2,990,453		$	2,931,192
U.S.		(5,065,563	)		(7,776,892	)
Malaysia		(697,684	)		(292,563	)
Total	$	(2,772,794	)	$	(5,138,263	)

Income taxes recorded for the three months ended September 30, 2025 and 2024, were estimated using the discrete method. Income taxes are based on the Company’s financial results through the end of the period, as well as the related change in the valuation allowance on deferred tax assets. The Company is unable to estimate the annual effective tax rate with sufficient precision for purposes of the effective tax rate method, which requires the Company to consider a projection of full-year income and the expected change in the valuation allowance. The estimated annual effective tax rate method was not reliable due to its sensitivity to small changes to forecasted annual pre-tax earnings and the effect of the valuation allowance, which create results with significant variations in the customary relationship between income tax expense and pre-tax income for the interim periods. As a result, the Company determined that using the discrete method is more appropriate than using the annual effective tax rate method.

The Company’s effective tax rate from operations was (17.53%) and (8.89%) for the three months ended September 30, 2025 and 2024, respectively. The Company’s effective tax rate differs from the federal statutory rate of 21% in each period primarily due to the Company’s net loss position, nondeductible expenses, and valuation allowance.

Income tax expense of $486,069 and $456,753 was from income generated during the three months ended September 30, 2025 and 2024, respectively. All income tax expenses arose solely from Hong Kong operation.

NOTE 13. STOCK-BASED COMPENSATION

In October 2022, the board of directors and stockholders of the Company approved the 2022 Equity Incentive Plan (as amended, the “Plan”) pursuant to which up to 15,000,000 shares of common stock may be issued pursuant to options, restricted stock or RSUs grants. The Plan is administered by the Compensation Committee of the Board of Directors. Awards under the Plan may be granted to officers, directors, employees and those consultants who qualify as a consultant or advisor under the instructions to the Company’s Form S-8 (File No. 333-273458) initially filed with U.S. Securities and Exchange Commission on July 26, 2023, and amended on November 15, 2024. The Compensation Committee has broad discretion in making awards, provided that any options shall be exercisable at the fair market value on the date of grant.

Restricted stock

During the three months ended September 30, 2025 and 2024, 84,140 and 20,405 shares of common stock were issued to the Company’s board of directors and service providers in settlement of restricted stock granted under the Plan, respectively. Restricted stock granted to directors were fully vested as of September 30, 2025. The Company recognized stock-based compensation expense totaling $240,984 and $157,611 during the three months ended September 30, 2025 and 2024, which were related to the restricted stock issued to the Company’s board of directors and a service provider, based on the grant date fair value of the awards. There are no unrecognized compensation expenses related to the restricted stock awards granted to one service provider as of September 30, 2025.

In June 2024, the Company entered into consulting agreements with two consultants which provide for the issuance of up to 150,000 shares of common stock to each consultant (a total of 300,000 shares of common stock). Under the terms of the consulting agreements, (a) 25,000 shares of common stock vested upon execution of the consulting agreements (a total of 50,000 shares of common stock), (b) 100,000 shares of common stock will vest upon the attainment of five separate sales-based targets, in 20,000 share increments (a total of 200,000 shares of common stock), and (c) 25,000 shares of common stock will vest on October 1, 2027, if the consulting agreements have not been terminated (a total of 50,000 shares of common stock). For the three months ended September 30,2025 and 2024, the Company has not issued or vested any common stock related to this consulting agreement with performance-based conditions.

In July 2024, the Company entered into consulting agreements with two consultants, which provide for the issuance of up to 140,000 shares of common stock to each consultant (a total of 280,000 shares of common stock). Under the terms of the consulting agreements, these 140,000 shares of common stock will vest upon the attainment of six separate sales-based targets, in 20,000 share increments, if the consulting agreements have not been terminated.

In July 2024, the Company entered into consulting agreements with two consultants, which provide for the issuance of up to 400,000 shares of common stock to each consultant (a total of 800,000 shares of common stock). Under the terms of the consulting agreements, (a) 75,000 shares of common stock vested upon execution of the consulting agreements (a total of 150,000 shares of common stock issued during the three months ended September 30, 2024), (b) 300,000 shares of common stock will vest upon the attainment of three separate sales-based targets, in 100,000 share increments (a total of 300,000 shares of common stock), and (c) 25,000 shares of common stock will vest upon the attainment of one separate sales-based target, if the consulting agreements have not been terminated. These consultant agreements were subsequently cancelled by June 30, 2025. Upon cancellation, 150,000 shares from the consultant agreements had been vested and issued, and there were 650,000 unissued and unvested shares being cancelled. For the three months ended September 30, 2024, 150,000 shares of common stock were issued and vested. For the three months ended September 30,2025, the Company has not issued or vested any common stock related to this consulting agreement with performance-based conditions.

The shares of common stock from above consulting agreements that vest upon the attainment of the sales-based targets include performance-based vesting conditions, which the Company has determined were not probable of being achieved at September 30, 2025. As such, the Company has not recognized any compensation expense as of September 30, 2025, related to the restricted common stock with performance-based vesting conditions. For the three months ended September 30, 2025 and 2024, the stock-based compensation expense related to the performance-based restricted common stock was $0 and $961,500, respectively.

Stock Options

During the three months ended September 30, 2025, there were 490,000 stock options granted, and these options shall vest over three years with the initial 1/3 of the awarded options vesting on the one-year anniversary of the grant date, with the remaining 2/3 of the award vesting monthly on a 1/24^th pro-rata basis for the following 24 months thereafter for each employee. During the three months ended September 30, 2024, there were 245,000 stock options granted, and these options shall vest over four years with the initial 25% of the awarded options vesting on the one-year anniversary of the grant date, with the remaining 75% of the award vesting monthly on a 1/36^th pro-rata basis for the following 36 months thereafter for each employee.

According to the Plan, vested stock options that are not exercised within three months after termination of employment will be forfeited. During the three months ended September 30, 2025 and 2024, there were 140,000 and 335,000 stock options being forfeited.

The following is a summary of stock option activity transactions as of and for the three months ended September 30, 2025 and 2024:

	Number Of options			Weighted average exercise price		Weighted average fair value per option		Weighted average remaining contractual life in years
Outstanding at June 30, 2025		1,438,125		$	8.15	$	4.61		8.0
Granted		490,000		$	2.70	$	1.62		9.8
Exercised		-		$	-	$	-		-
Expired		(38,125	)	$	8.00	$	4.54		8.2
Forfeiture		(140,000	)	$	6.75	$	4.11		9.0
Outstanding at September 30, 2025		1,750,000		$	6.69	$	3.78		8.4
Exercisable at September 30, 2025		585,833		$	8.67	$	4.70		7.1

	Number Of options			Weighted average exercise price		Weighted average fair value per option		Weighted average remaining contractual life in years
Outstanding at June 30, 2024		3,255,000		$	9.10	$	5.13		9.1
Granted		245,000		$	7.65	$	4.66		9.8
Exercised		-		$	-	$	-		-
Expired		-		$	-	$	-		-
Forfeiture		(335,000	)	$	9.84	$	5.59		9.0
Outstanding at September 30, 2024		3,165,000		$	8.91	$	5.04		8.9
Exercisable at September 30, 2024		627,500		$	9.41	$	5.07		7.6

The aggregate intrinsic value of options outstanding with an exercise price less than the closing price of the Company’s common stock as of September 30, 2025 was $0. Aggregate intrinsic value represents the value of the Company’s closing stock price on the last trading day of the period in excess of the weighted-average exercise price multiplied by the number of options outstanding or exercisable.

Total expense of options vested for the three months ended September 30, 2025 and 2024, was $260,648 and $567,601, respectively. The options granted during the three months ended September 30, 2025 were valued using the binomial option pricing model based on the following range of assumptions:

	Three months ended September 30,
	2025			2024
Exercise multiple		2.8			2.8
Expected volatility		60	%		60	%
Risk-free interest rate		4.380	%		3.650% - 4.280	%
Expected dividend yield		0	%		0	%

RSUs

RSUs granted to employees vest cumulatively as to one-third of the restricted stock units on each of the first three anniversaries of the date of grant based on continues service. Each vested RSU entitles holder to receive one share of common stock upon exercise. RSUs are accounted for as equity using the fair value method, which requires measurement and recognition of compensation expense for all awards granted to employees, directors and consultants based upon the grant-date fair value.

	Shares			Weighted average grant date fair value
Unvested, June 30, 2025		404,970		$	6.35
Granted		210,000			2.70
Vested		(11,990	)		9.76
Canceled and forfeited		-			-
Unvested, September 30, 2025		602,980		$	5.01

	Shares			Weighted average grant date fair value
Unvested, June 30, 2024		483,606		$	9.76
Granted		-			-
Vested		-			-
Canceled and forfeited		(21,579	)		9.76
Unvested, September 30, 2024		462,027		$	9.76

Total expense for the RSUs during the three months ended September 30, 2025 and 2024 was $436,516 and $320,876, respectively. During the three months ended September 30, 2025 and 2024, there were 11,990 and 0 shares issued as a result of employees exercising vested RSUs granted to them.

The following table summarizes the allocation of stock-based compensation in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss:

	Three months ended September 30,
	2025		2024
General and administrative expenses	$	816,925	$	958,393
Sales and marketing expenses		121,223		1,049,195
Total	$	938,148	$	2,007,588

As of September 30, 2025, the Company had approximately $5,591,163 in unrecognized compensation expenses related to all non-vested options and RSUs that will be recognized over the weighted-average period of 2.01 years.

NOTE 14. LOSS PER SHARE

The following table presents a reconciliation of basic net loss per share:

	Three months ended September 30,
	2025			2024
Net loss	$	(3,258,863	)	$	(5,595,016	)
Weighted average basic and diluted ordinary shares outstanding		57,273,184			56,601,320
Net loss per basic and diluted share of common stock	$	(0.06	)	$	(0.10	)

NOTE 15. COMMITMENTS AND CONTINGENCIES

From time to time, the Company may be subject to legal or regulatory proceedings, investigations and claims incidental to the conduct of its business. The Company is not a party to, nor is the Company aware of, any legal or regulatory proceedings, investigations or claims which, in the opinion of our management, are likely to have a material adverse effect on our business, financial condition or results of operations.

Concurrently with the JV Agreement (see Note 7), Ispire entered into an exclusive supply agreement with Berify, whereby Ispire is obligated to purchase all Bluetooth enabled integrated circuits to be used on vape type devices to control the activation of the device that are to be sold to IKE at cost plus a 20% mark-up. In addition, IKE entered into an exclusive supply agreement with Ispire, whereby IKE is obligated to purchase at cost plus a 5% mark-up all products to be sold by IKE in the nicotine field.

ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements and the related notes appearing elsewhere in this report. See “Cautionary Forward-Looking Statements.” Actual results could differ materially from those discussed below.

Overview

As stated in our corporate mission, we are committed to delivering superior products that challenge industry norms, with the goal of delivering an unmatched customer and adult consumer experience. In achieving this, risk reduction is central to our mission, and we aim to improve the lives of our consumers through cutting-edge research and development. Our technology platforms look to reduce youth access to vaping products, which in turn, will facilitate our ability to provide adult consumers with the products they desire.

We are engaged in the research and development, design, commercialization, sales, marketing and distribution of branded and non-branded vaping hardware products in both the nicotine and cannabis spaces. Vaping refers to the practice of inhaling and exhaling the vapor produced by an electronic vaping device. These products are sold into the global nicotine and cannabis markets in the form of e-cigarettes or cartridges filled with oils by our customers, respectively.

We sell our e-cigarette (or nicotine) products globally, in markets where we are legally permitted to do so. To date, our nicotine products are marketed under the “Aspire” brand name and are sold primarily through our expansive distribution network. However, we are expanding our international presence via the launch of nicotine products under the Ispire platform. These products have started to be launched under licensing arrangements with the owners of selected partner brands.

We currently sell our cannabis vaping hardware in the United States, Canada, and South Africa. However, we are continuing to develop our sales network across Europe, South America, and other regions in preparation for legalization in these markets. Our cannabis products are sold under the Ispire brand name, primarily on an ODM basis to other cannabis vapor companies including multi and single-state operators, brand owners and co-packers. ODM generally involves the design and customization of the core products to meet each brand’s unique image and needs. Our hardware products are sold by our customers under their own brand names. We do not “touch the cannabis plant” in the production and sale of our hardware products and thus are not subject to the specific cannabis-related regulatory and taxation provisions of the industry (e.g., IRS Code Section 280E).

Since our initial public offering in April 2023, we have completed three fundraising rounds. The first was executed as part of our initial public offering, from which we raised approximately $18.3 million after underwriting and other offering expenses.

In June 2023, we raised net proceeds of approximately $7.4 million, after placement agent and offering expenses, from the private placement of our Common Stock to three investors.

In March 2024, we raised net proceeds of approximately $10.6 million, after placement agent fees and offering expenses, through a public offering of our Common Stock priced at $6.00 per share. We used the net proceeds from this offering in connection with the establishment and operation of our manufacturing facility in Malaysia, the funding of our joint venture with Touch Point Worldwide Inc. d/b/a/ Berify and Chemular Inc. and for working capital and general corporate purposes, including research and development.

Regulatory Risks

The sale of nicotine and cannabis products is subject to regulations worldwide. Many countries prohibit the sale of any cannabis products, and many countries have regulations relating to nicotine products, with a particular emphasis on underage sales. We work closely with our various global distribution partners to help ensure our nicotine products comply with local regulations (e.g., packaging, ingredient disclosure, health warnings, etc.). Changes in the regulatory environment can be enacted swiftly and may lead to our products becoming non-compliant in one or more international markets. This regulatory scenario may severely disrupt our business in these markets while we resolve the deficiencies (if possible) with the current product offering.

E-cigarette regulation

Regulation regarding e-cigarettes varies across countries, from limited regulation to a total ban. The legal status of e-cigarettes is currently pending in many countries. As e-cigarettes have become more and more popular recently, many countries are considering imposing more stringent law and regulations to regulate this market. Changes in existing law and regulations and the imposition of new laws or regulations in countries and regions that our major customers are in may adversely affect our business. Please see the sections titled “Item 1. Business – Regulation” and “Item 1A. Risk Factors” above for our robust discussion of this topic.

Accounts Receivable

Our business relies on the collection of accounts receivable from our customers in a timely manner to maintain liquidity and support our ongoing operations. The balance of the allowance for credit losses was $17.3 million and $18.0 million at September 30, 2025 and June 30, 2025, respectively.

Our failure or inability to collect accounts receivable when due results from a number of factors, including (i) our customer’s failure to pay as a result of adverse economic conditions affecting the customer’s cash flow; (ii) our failure to implement effective collection efforts; and (iii) disputes over contract terms, product quality or delays in delivery. Due to federal status of cannabis and the uncertainty of adverse economic conditions in cannabis industry, the Company has focused more on nicotine business in the past year. Although we may implement strategies to mitigate these risks, there can be no assurance that such measures will be entirely effective, and we may continue to incur write-offs of accounts receivable, which may impair our ability to operate profitably.

Key Factors that Affect Our Results of Operations

We believe the following key factors may affect our financial condition and results of operations:

●

The effect of legislation and regulations affecting non-combustible nicotine products and cannabis vaping products.

●

If we elect to market nicotine vaping products in the United States, our ability to obtain regulatory approval to market additional nicotine vaping products in the United States and the significant cost of seeking such approval.

●

Our ability to develop and market nicotine and cannabis vaping products to meet the changing tastes of adult consumers.

●

The effects of competition.

●

The development of an international market for cannabis vaping products, which is presently primarily limited to certain states in the United States.

Results of Operations

The following table sets forth a summary of our unaudited condensed consolidated statements of operations and comprehensive income for the three months ended September 30, 2025 and 2024 (dollars in thousands except per share amounts).

	Three Months Ended September 30,
	2025						2024
				% of Revenue						% of Revenue
Revenue	$	30,351			100.0	%	$	39,338			100.0	%
Cost of revenue		(25,204	)		(83.0	)%		(31,664	)		(80.5	)%
Gross profit		5,147			17.0	%		7,674			19.5	%
Operating expenses		(7,842	)		(25.8	)%		(12,937	)		(32.9	)%
Loss from operations		(2,695	)		(8.9	)%		(5,263	)		(13.4	)%
Other (loss) income, net		(78	)		(0.3	)%		125			0.3	%
Loss before income taxes		(2,773	)		(9.1	)%		(5,138	)		(13.1	)%
Income taxes		(486	)		(1.6	)%		(457	)		(1.2	)%
Net loss		(3,259	)		(10.7	)%		(5,595	)		(14.2	)%
Other comprehensive loss		(8	)		(0.1	)%		(155	)		(0.4	)%
Comprehensive loss		(3,267	)		(10.8	)%		(5,750	)		(14.6	)%
Net loss per ordinary share (basic and diluted)	$	(0.06	)				$	(0.10	)
Weighted ordinary shares outstanding		57,273,184						56,601,320

Revenue

The following table sets out the breakdown of our revenue percentage by region based on information provided to us by our distributors.

	Three months ended September 30,
	2025			2024
Europe		68.2	%		55.8	%
North America (the U.S. and Canada)		18.0	%		24.8	%
Asia Pacific (excluding PRC)		7.8	%		9.8	%
Others		6.0	%		9.6	%
Total		100.0	%		100.0	%

Our revenue decreased by $8,987,429, or 22.8%, from $39,338,313 for the three months ended September 30, 2024, to $30,350,884 for the three months ended September 30, 2025. The decrease in revenue is the combined effect of (i) decreases in product sales in the United States of $4.2 million from $9.7 million for the three months ended September 30, 2024, to $5.5 million for the three months ended September 30, 2025, (ii) decreases in sales to other regions of $2.0 million from $3.8 million for the three months ended September 30, 2024 to approximately $1.8 million for the three months ended September 30, 2025, mainly contributed by decrease in sales to South Africa of $2.8 million, and (iii) decreases in sales of vaping products in Asia Pacific of $1.5 million from $3.9 million for the three months ended September 30, 2024 to approximately $2.4 million for the three months ended September 30, 2025, and (iv) decreases in sales of vaping products in Europe of $1.3 million from $22.0 million for the three months ended September 30, 2024 to approximately $20.7 million for the three months ended September 30, 2025.

Cost of Revenue

Cost of revenue mainly consists of cost of purchases of vaping products, that the majority of the purchase are from Shenzhen Yi Jia. Cost of revenue decreased by $6,459,823, or 20.4%, from $31,663,935 for the three months ended September 30, 2024, to $25,204,112 for the three months ended September 30, 2025. The decrease in cost of revenue is in line with decrease in sales.

Gross Profit

The following tables show the revenue, cost of revenue and gross profit of our products (dollars in thousands).

Three Months Ended September 30, 2025
Revenue		Cost of revenue		Gross profit		Gross profit %
$	30,350	$	25,204	$	5,147		17.0	%

Three Months Ended September 30, 2024
Revenue		Cost of revenue		Gross profit		Gross profit %
$	39,338	$	31,664	$	7,674		19.5	%

Gross profit decreased by $2,527,606, or 32.9%, from $7,674,378 for the three months ended September 30, 2024, to $5,146,772 for the three months ended September 30, 2025, while our gross margin decreased from 19.5% to 17.0%. The decrease in gross margin was primarily due to changes in product mix with less higher margin products being sold during the three months ended September 30, 2025.

Operating Expenses

Operating expenses decreased by $5,095,166 or 39.4%, from $12,937,247 for the three months ended September 30, 2024 to $7,842,081 for the three months ended September 30, 2025.

Our sales and marketing expenses mainly consist of employee salaries and benefits, marketing expenses, travel expenses, and other miscellaneous expenses.

Sales and marketing expenses decreased by $1,427,403, or 47.7%, from $2,992,247 for the three months ended September 30, 2024 to $1,564,844 for the three months ended September 30, 2025. The decrease in sales and marketing expenses was primarily due to a decrease in (i) stock-based compensation expense related to selling personnels of $0.9 million comparing the three months ended September 30, 2025 and 2024 and (ii) decrease in travelling expense of $0.4 million as a result of less travelling activities during the three months ended September 30, 2025.

Credit loss expenses decreased by $1,337,829, or 43.1%, from $3,102,081 for the three months ended September 30, 2024, to $1,764,252 for the three months ended September 30, 2025. The decrease is due to more collection of customer payments from repayment plan negotiated and thus less allowance for credit losses were provided as of September 30, 2025.

Our general and administrative expenses consist of employees’ salaries and benefits, rental expense, professional fees, stock-based compensation expenses and other administrative expenses. General and administrative expenses decreased by $2,329,934, or 34.0%, from $6,842,919 for the three months ended September 30, 2024, to $4,512,985 for the three months ended September 30, 2025. The decrease was primarily due to (i) decrease in payroll of $1.2 million comparing the three months ended September 30, 2025 and 2024 as a result of decrease in headcount of North America, and (ii) decrease of $1.1 million of miscellaneous administrative expenses from North America as a result of drop in headcount and cost reduction for the three months ended September 30, 2025.

Other (expense) income, net

Other (expense) income, net includes interest income, interest expense, exchange loss, net and other (expense) income.

Interest income increased by $95,386, from $86 for the three months ended September 30, 2024, to $95,472 for the three months ended September 30, 2025. The increase in interest income is mainly due to charging late fees from customers.

Interest expense increased by $100,712, from $11,464 for the three months ended September 30, 2024, to $112,176 for the three months ended September 30, 2025. The increase in interest expense is mainly due to borrowing engaged in February 2025.

Other (expense) income, net mainly consists of loss on equity method investment, credits from company credit card and other miscellaneous expenses. Other (expense) income changed by $88,982, or 483.6%, from net income of $18,399 for the three months ended September 30, 2024 to net expense of $70,583 for the three months ended September 30, 2025.

Exchange gain, net changes by $107,783, or 91.7%, from net exchange gain $117,585 for three months ended September 30, 2024, to net exchange gain of $9,802 for three months ended September 30, 2025.

As a result of these factors, total other (expense) income, net decreased by $202,091, from other income, net of $124,606 for three months ended September 30, 2024, to other expense, net of $77,485 for three months ended September 30, 2025.

Income Taxes

Income taxes increased by $29,316 or 6.4%, from $456,753 for three months ended September 30, 2024, to $486,069 for three months ended September 30, 2025. We had a consolidated net loss for both three months ended September 30, 2025 and 2024, which was the combined effect of a profit by Aspire Science, a loss by Aspire North America and Ispire Malaysia. The profit from Aspire Science resulted in a current tax expense. The increase in valuation allowance reflects our view that the taxable income in the future will not be sufficient to utilize the carryforward loss.

Net Loss

As a result of the foregoing, net loss decreased by $2,336,153, from net loss of $5,595,016, or $(0.10) per share, for the three months ended September 30, 2024, to a net loss of $3,258,863, or $(0.06) per share, for the three months ended September 30, 2025.

Liquidity and Capital Resources

The following table summarizes our changes in working capital from June 30, 2025 to September 30, 2025 (dollars in thousands).

	September 30, 2025		June 30, 2025		Change			% Change
Current Assets	$	75,128	$	72,908	$	2,220			3.0	%
Current Liabilities		65,813		72,540		(6,727	)		(9.3	)%
Working Capital		9,315		368		8,947			2,431.3	%

The following table sets forth information as to consolidated cash flow information for the three months ended September 30, 2025 and 2024 (dollars in thousands).

	Three Months Ended September 30,						Increase
Consolidated cash flow data:	2025			2024			(Decrease)
Net cash (used in) provided by operating activities	$	(1,184	)	$	3,610		$	(4,794	)
Net cash used in investing activities		(140	)		(925	)		785
Net cash used in financing activities		(319	)		-			(319	)
Net decrease in cash	$	(1,643	)	$	2,685		$	(4,328	)

Net cash flow used in operating activities for the three months ended September 30, 2025, of $1.2 million, reflected our net loss of $3.3 million, adjusted primarily as follows: add back of impairment of account receivable of $1.8 million, add back of share-based compensation expense of $0.9 million, a decrease in accounts receivable of $0.7 million, a decrease in prepaid expenses and other current assets of $0.5 million, offset by decrease in contract liabilities of $1.9 million.

Net cash flow provided by operating activities for the three months ended September 30, 2024 of $3.6 million, reflected our net loss of $5.6 million, adjusted primarily as follows: an add-back of credit loss expenses of $3.1 million, an add-back of stock based compensation expense of $2.0 million, increase in accounts payable of $9.5 million, offset by an increase in accounts receivable of $5.7 million.

Net cash flow used in investing activities for the three months ended September 30, 2025 of $0.1 million reflected primarily acquisition of intangible assets of $0.1 million.

Net cash flow used in investing activities for the three months ended September 30, 2024 of $0.9 million reflected primarily purchase of property, plant and equipment of $0.3 million and capitalized costs of patents of 0.6 million.

Net cash flow generated from financing activities for the three months ended September 30, 2025, of $0.3 million reflected primarily repayment of borrowing of $0.3 million.

To date, we have financed our operations primarily through cash flow from operations and working capital accounts payable from our major stockholders, who are our co-chief executive officer and his wife, when necessary. We plan to support our future operations primarily from cash generated from our operations and cash on hand. As of the date of this Quarterly Report, we believe that our current cash and cash flows provided by operating activities, and the net proceeds from our equity offerings and borrowing will be sufficient to meet our working capital needs in the next 12 months. If we experience an adverse operating environment or incur unanticipated capital expenditure requirements, or if we decide to accelerate our growth, then additional financing may be required. We cannot give any assurance that additional financing will not be required or, if required, would be available on favorable terms if at all. Such financing may include the use of additional debt or the sale of additional equity securities. Any financing which involves the sale of equity securities or instruments that are convertible into equity securities could result in dilution to our stockholders which may be substantial.

The cash held at a bank by our Hong Kong operating subsidiary can be freely transferred within our corporate structure without restriction. If our Hong Kong operating subsidiary were to incur additional debt on its own behalf in the future, the instruments governing the debt may restrict the ability of our operating subsidiaries to transfer cash to our U.S. investors.

Contractual Obligations

As of September 30, 2025 and June 30, 2025, we had contract liabilities of $2,962,299 and $4,861,250, respectively. These liabilities are advance deposits received from customers after an order has been placed. We expect all of the contract liabilities to be settled in less than one year.

We have operating lease arrangements for office and factory premises for Hong Kong, California and Malaysia, which are treated as right-of-use assets. These leases typically have terms of two to five years. Leases with an initial term of 12 months or less are not presented as right-of-use assets and are expensed over the lease term. All other lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date.

The balances for the right-of-use assets and lease liabilities where we are the lessee are presented as follows:

	As of		As of
	September 30, 2025		June 30, 2025
Operating lease right-of-use assets	$	4,719,751	$	5,030,005

Operating lease liabilities – current	$	1,750,411	$	1,838,815
Operating lease liabilities – non-current		2,883,856		3,267,522
Total	$	4,634,267	$	5,106,337

The Company had no impairment of operating lease right-of-use assets during the three months ended September 30, 2025 and 2024.

As of September 30, 2025, the maturities of our lease liabilities (excluding short-term leases) are as follows:

	As of September 30, 2025
October 1, 2025 to June 30, 2026	$	1,554,875
July 1, 2026 to June 30, 2027		1,585,914
July 1, 2027 to June 30, 2028		779,653
July 1, 2028 to June 30, 2029		698,977
July 1, 2029 to June 30, 2030		465,985
Total future lease payments		5,085,404
Less: imputed interest		(451,137	)
Total lease liabilities	$	4,634,267

As of September 30, 2025, we have a borrowing balance of $1,665,435 outstanding. The maturities of our borrowing are as follows:

	As of September 30, 2025
October 1, 2025 to September 30, 2026		1,146,766
October 1, 2026 to September 30, 2027		518,669
Total borrowing		1,665,435

As of September 30, 2025, we recorded an unpaid $5.8 million consideration in accrued liabilities and other payables on the unaudited condensed consolidated balance sheet for a committed investment of $9 million into a joint venture investment named IKE Tech LLC.

Trend Information

Other than as disclosed elsewhere in this Form 10-K, we are not aware of any trends, uncertainties, demands, commitments, or events that are reasonably likely to have a material effect on our net revenues, income from operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.

Seasonality

Seasonality does not materially affect our business or the results of our operations.

Off-Balance Sheet Arrangements

We do not have off-balance sheet arrangements.

As a company with less than $1.235 billion in revenue for our last fiscal year, we qualify as an “emerging growth company” pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. We have elected to take advantage of such exemptions. We could lose Emerging Growth Company status if we become a “Large Accelerated Filer.” This would occur if we had a public float of $700 million or more, as of the last business day of our most recently completed second fiscal quarter.

ITEM 3: Quantitative and Qualitative Disclosure About Market Risk

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

ITEM 4: Controls and Procedures

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on the foregoing, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective as of September 30, 2025, due to (1) the lack of controls needed to enable us to evaluate significant estimates, including (i) the sufficiency of inventory reserve for slow-moving inventories and (ii) the credit loss history and use of it to evaluate the sufficiency of credit loss reserve for accounts receivable under the Topic 326; (2) the lack of sufficient personnel with appropriate levels of accounting knowledge and experience to address complex U.S. GAAP accounting issues and to prepare and review financial statements and related disclosures under U.S. GAAP, which resulted in restatements of certain unaudited/audited financial statements prior to the fiscal year ended June 30, 2025; and (3) the lack of IT general controls regarding cyber security governance, logical access security and service organization management.

Changes in Internal Control over Financial Reporting

During the three months ended September 30, 2025, we have continued to develop and implement internal controls over financial reporting particularly in view of the material weakness described above.

Inherent Limitations of Controls

Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. Controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or deterioration in the degree of compliance with the policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may be subject to legal proceedings, investigations and claims incidental to the conduct of our business.

We are not a party to, nor are we aware of, any legal proceedings, investigations or claims which, in the opinion of our management, are likely to have a material adverse effect on our business, financial condition or results of operations.

Item 1A. Risk Factors

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item. Our current risk factors are set forth in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025, filed with the SEC on September 15, 2025.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three months ended September 30, 2025, the Company did not conduct any unregistered sales of equity securities.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Pursuant to the share repurchase program approved by the Company’s board of directors on January 20, 2025, for a period of 24 months, the Company may repurchase up to $10 million of the currently outstanding shares of the Company’s common stock. This approval authorized the Company to enter into a repurchase program to purchase shares of the Company’s common stock (i) in the open market, (ii) in privately negotiated transactions, (iii) block purchases, or (iv) otherwise in accordance with applicable federal securities laws, including Rule 10b-18 of the Exchange Act. During the quarterly period ended September 30, 2025, the Company repurchased 17,046 shares of its common stock.

ISSUER PURCHASES OF EQUITY SECURITIES⁽¹⁾
Period	Total Number of Shares (or Units) Purchased		Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
July (July 1, 2025 – July 31, 2025)		-		-		-	$	9,939,556
August (August 1, 2025 – August 31, 2025)		-		-		-	$	9,939,556
September (September 1, 2025 – September 30, 2025)		17,046		2.64		17,046	$	9,894,555
Total		17,046		2.64		17,046	$	9,894,555

(1) On January 20, 2025, the Company’s board of directors authorized the Company’s entry into a program to repurchase up to $10 million of shares of the Company’s Common Stock, as previously disclosed in the Company’s Current Report on Form 8-K filed with the SEC on January 22, 2025. The board of directors’ authorization to enter into such a repurchase program expires on January 20, 2027.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine and Safety Disclosure

Not applicable

Item 5. Other Information

No director or Section 16 officer adopted or terminated a trading arrangement intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or a “non-Rule 10b5-1” trading arrangement during the periods reported in this Form 10-Q.

Item 6. Exhibits

The following is a complete list of exhibits filed or furnished, as applicable, as part of this Form 10-Q. Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of Regulation S-K.

Exhibit		Description
3.1		Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Company’s Registration Statement on Form S-1 (File No. 333-269470) filed with the SEC on January 31, 2023).
3.2		Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024, filed with the SEC on September 27, 2024).
31.1*		Certification of Co-Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of Co-Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*		Inline XBRL Instance Document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*		Cover Page Interactive Data File (embedded within the Inline XBRL document)

*	Filed herewith.
**	Furnished herewith.

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: November 6, 2025	ISPIRE TECHNOLOGY INC.

	By:	/s/ Michael Wang
		Michael Wang
		Co-Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ Jie Yu
		Jie Yu
		Chief Financial Officer
		(Principal Financing and Accounting Officer)

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Three Months Ended
September 30,

Major Suppliers